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Astoria Energy, LLC - Interim Decision, July 17, 2001

Interim Decision, July 17, 2001

STATE OF NEW YORK : DEPARTMENT OF ENVIRONMENTAL CONSERVATION
50 Wolf Road
Albany, New York 12233-1010

In the Matter of

the Applications for:
(1) a Clean Air Act (CAA) Title V permit pursuant to Environmental Conservation Law (ECL)
Article 19, 6 NYCRR Part 201 and Subparts 201-6.1 and 231-2;
(2) CAA Title IV permit pursuant to 40 Code of Federal Regulations (CFR) § 76.6(a)(3);
(3) Prevention of Significant Deterioration (PSD) conditions
pursuant to 40 CFR §§ 52.21 and 124; and
(4) the transfer and modification of a State Pollutant Discharge Elimination System (SPDES)
storm water discharge permit pursuant to Article 17 of the ECL.

- by -

Astoria Energy, LLC

Case No. 2-6301-00647/00001

PSC Case No. 99-F-1191

INTERIM DECISION

July 17, 2001

INTERIM DECISION

Introduction and Background

This interim decision relates to appeals from the issues ruling ("Ruling") of Administrative Law Judge ("ALJ") P. Nicholas Garlick dated May 24, 2001. The ALJ's Ruling relates to the application before the New York State of Environmental Conservation ("Department" or "DEC") for certain environmental permits sought by Astoria Energy, LLC. ("Astoria" or "Applicant") as part of its application for a certificate of environmental compatibility and public need pursuant to Article X of the Public Service Law ("PSL"). ALJ Garlick's Ruling was part of a joint ruling on issues prepared by ALJ Garlick as the Associate Examiner and Presiding Examiner J. Michael Harrison.(1) The New York Public Interest Research Group ("NYPIRG") and the combined party of the Office of the President, Borough of Queens and the Coalition Helping to Organize a Kleaner Environment ("Queens/CHOKE") filed their appeals of the ALJ's Ruling on June 1, 2001 and 5, 2001, respectively. Replies to the appeals were filed by the Applicant and Department Staff ("Staff") on June 12, 2001. Queens/Choke subsequently withdrew its appeal and, accordingly, it will not be addressed in this interim decision. The Article X hearing is scheduled to commence on July 18, 2001.

The Applicant proposes to construct and operate a combined-cycle electric generating facility that will produce 1,000 megawatts ("MW") of electricity. The facility will use natural gas as its primary source of fuel, with low sulfur distillate fuel oil serving as a backup for up to 720 hours annually. The facility will consist of two independent two-on-one combined cycle power blocks. Each power block will contain two General Electric Frame 7F series combustion turbines ("CT"), two heat recovery steam generators and one steam turbine. The facility will utilize air-cooled condensers to condense the steam turbine exhaust. There will be no water intake from the East River. When firing natural gas the facility will control nitrogen oxide ("NOx") emissions by using dry low-NOx combusters and a selective catalytic reduction ("SCR") system. When firing low distillate fuel oil, the facility will control NOx emissions by injecting water into the CT and using the SCR system. The facility stack will be 269 feet high.

The project site is located at 17-10 Steinway Street, Astoria, Queens. The site is currently a fuel oil storage and distribution terminal operated by Castle Astoria Terminals, Inc., and is zoned M3-1 Heavy Manufacturing under the New York City Zoning Resolution. The project site currently contains several large fuel oil tanks. Two existing storage tanks will be refurbished and used to store approximately 12.6 million gallons of backup low sulfur distillate fuel oil.

This interim decision will address the appeals involving issues which arise within the context of federally delegated or approved environmental permitting authority to the Department by the United States Environmental Protection Agency ("USEPA"). All other matters raised in the appeals are before the New York State Board on Electric Generation Siting and the Environment (the "Siting Board" or "Board") concerning the PSL Article X application, PSC Case No. 99-F-1191.

Standards for Adjudication

Under the Department's permit hearing procedures, an issue is adjudicable if "it is raised by a potential party and is both substantive and significant." 6 NYCRR 624.4(c)(1)(iii). An issue is "substantive" if there is sufficient doubt about the applicant's ability to meet statutory or regulatory criteria applicable to the project, such that a reasonable person would require further inquiry. In determining whether such a demonstration has been made, the ALJ must consider the proposed issue in light of the application and related documents, the draft permit, the content of any petitions filed for party status, the record of the issues conference and any subsequent written arguments authorized by the ALJ. An issue is "significant" if it has the potential to result in the denial of a permit, a major modification to the proposed project or the imposition of significant permit conditions in addition to those proposed in the draft permit. 6 NYCRR 624.4(c)(2),(3).

Prior decisions of the Commissioner establish that adjudication of issues occurs only where the ALJ has sufficient doubt about an applicant's ability to meet all statutory and regulatory criteria such that a reasonable person would inquire further (In the Matter of Hydra-Co. Generations, Inc., Interim Decision of the Commissioner, April 1, 1988) and where, in the ALJ's judgment, there is a reasonable likelihood that adjudication would result in amended permit conditions or project denial. In the Matter of Jay Giardina, Interim Decision of the Commissioner, September 21, 1990.

In situations where Department Staff has reviewed an application and finds that a component of the applicant's project, as proposed or as conditioned by the draft permit, conforms to all applicable requirements of statute and regulation, the burden of persuasion is on the potential party proposing the issue related to such component to demonstrate that the issue is both substantive and significant. 6 NYCRR 624.4(c)(4). Where DEC Staff and the applicant are not in disagreement over the terms and conditions of the proposed permit, the permit application and the draft permit prepared by Staff are prima facie evidence that a proposed project will meet all of the relevant statutory and regulatory criteria. See In the Matter of Sithe/Independence Power Partners, L.P., Interim Decision of the Commissioner, November 9, 1992. Thus, the burden on the intervening party in instances where Department Staff and the applicant agree on the terms and conditions of the permit is not a superficial one. See Matter of Citizens For Clean Air v. New York State Department of Environmental Conservation, 135 A.D.2d 256, 260-261 (3d Dept. 1988)(court upheld burden imposed on potential intervenors and further upheld the Commissioner's determination to exclude certain issues from adjudication).

While the intervenor's offer of proof at the issues conference need not be so convincing as to prevail on the merits, its offer must amount to more than mere assertions or conclusions. See id. "The purpose of adjudication is not simply to develop or refine information concerning the project but rather to aid in decision making." In the Matter of Sithe/ Independence Power Partners, Interim Decision of the Commissioner, November 9, 1992. Conducting an adjudicatory hearing where "offers of proof, at best, raise uncertainties," or where such a hearing would "dissolve into an academic debate" is not the intent of the Department's hearing process. Matter of Adirondack Fish Culture Station, Interim Decision of the Commissioner, August 19, 1999, p. 8, citing In the Matter of AKZO Nobel Salt Inc., Interim Decision of the Commissioner, January 31, 1996.

Judgments about the strength of the offer of proof must be made in the context of the application materials, the analysis by Staff, draft permits and the issues conference record. Offers of proof submitted by a prospective intervenor may be completely rebutted by reference to any of the above, alone or in combination. In such a case, it would be a disservice to the applicant and the public at large to proceed any further with time consuming and costly litigation. See Matter of Bonded Concrete, Inc., Interim Decision of the Commissioner, June 4, 1990.

In this proceeding, environmental permit information is contained in the Article X application filing, the draft permits and attendant information required by the Department. This information constitutes the Applicant's prima facie case for issuance of the Department's permits. See Matter of Athens Generating Company LP., Interim Decision, June 2, 2000, p. 4, citing Sithe, supra. See also, Matter of 4'Cs Development Corporation, ALJ Ruling, February 27, 1996; Matter of Waste Management of NY, LLC., Interim Decision, May 15, 2000. The application materials are available at the issues conference to assist the DEC ALJ in determining if there are issues requiring an adjudicatory hearing.

The ALJ's Ruling

As noted above, Queens/CHOKE withdrew is appeal and therefore the ALJ's Ruling on the Queens/CHOKE proposed issues is moot. Turning to the matters raised by NYPIRG, the ALJ found that none of their thirty-seven issues met the standards for adjudication under the applicable 6 NYCRR Part 624 regulations. Accordingly, the ALJ denied party status to NYPIRG. In addition, the ALJ ruled that NYPIRG's late filed petition for party status was deficient because NYPIRG did not demonstrate that there was good cause for the late filing, as required by 6 NYCRR 624.5(c)(2)(ii).

Appeal

NYPIRG appeals the ALJ's Ruling denying it party status and the ALJ's findings that there are no issues for adjudication regarding its proposed issues. See Ruling, at 21-39, "DEC Issues #7-#43". Department Staff and the Applicant do not appeal the ALJ's Rulings. In their respective replies, both Staff and the Applicant assert that NYPIRG's appeal should be denied in its entirety.

Discussion

NYPIRG's Appeal

NYPRIG submitted "Comments on the Draft Title V Operating Permit for the Astoria Energy Power Plant..." as part of the public comment process, to be taken into account by Staff in reviewing the draft permits for the facility. The ALJ generously allowed NYPIRG the opportunity to have those comments considered as proposed adjudicable issues in the proceeding. The ALJ then categorized the matters in his Rulings as: proposed issues where no dispute remains; proposed issues that are not significant; and, proposed issues that are not substantive. The ALJ determined no substantive and significant issues were raised.

On appeal, NYPIRG essentially argues that any of its public comments that were in fact adopted by Staff are prima facie evidence that the draft permit was flawed and that such modified permit adopting NYPIRG's comments establishes an adjudicable issue. Appeal, at p. 7. For example, Staff has agreed to modify the draft permit and has issued a public notice respecting the emission reduction credits ("ERC") as a result of the comments. Further, NYPIRG argues that all issues (comments) must be adjudicated and cannot be dismissed based upon Staff's disagreement with some comments. Additionally, NYPIRG asserts its comments cannot be considered "minor aspects of the permit" as characterized by Staff and the Applicant and any future changes to the draft permit by Staff should be adjudicated. NYPIRG points out the draft permit is the "only legal document binding the facility to the State's law and regulations."

Both DEC Staff and the Applicant respond that the ALJ's finding should not be disturbed and NYPIRG's appeal should be rejected. Staff notes that the vast majority of the comments are minor legal or drafting points best suited to resolution through the non-adjudicatory process. Further, in instances where Staff has agreed to make revisions based on the comments, no adjudicable issue logically may be found.

One purpose of the public comment process is to collect comments that can clarify permit language, add conditions to further protect the environment, or otherwise provide a mechanism where Staff and the Applicant may adjust the draft permit, taking into account the public's concerns. While intervenors can suggest the imposition of substantive and significant permit conditions, such suggestions must be accompanied by an adequate offer of proof to join them as an issue in the event the condition is rejected by Staff and/or the Applicant. It is clear here, and I agree with Staff, that the adjustments to the draft permit language are not of sufficient consequence to warrant adjudication. A review of Staff's pre-hearing response to NYPIRG's petition for party status responding to each NYPIRG comment adequately articulates the basis and rationale clarifying the draft permit condition.

I also concur that where the permit conditions were in fact adjusted, logically no adjudicable issue can be found since the adjustment to the permit condition eliminates the concern. Accordingly, NYPIRG's implication that such adjustment automatically raises an adjudicable issue is rejected. With respect to NYPIRG's ERC comment asserting that the draft permit did not specify the sources of ERC's, Staff has publicly noticed this matter and thus no issue is raised.

With respect to NYPIRG's other comments, for example, that the draft permit must include the sulfur content limit in the backup fuel and that the methods for enforcing opacity standards are lacking, the draft permits in fact contain a limit on the sulfur back up fuel, and testing for opacity is scheduled once for the five year term of the permit. The other matters raised in the appeal, fall within the above overall analysis regarding comments on the draft permit conditions. Accordingly, I affirm the ALJ's Rulings on those additional points.

NYPIRG also appeals the ALJ's denial of party status for failure to show "good cause" for its late filed petition. 6 NYCRR 624.5(c)(2)(i). In view of the above discussion on the merits, it is not necessary to address this matter.

Conclusion

Upon review of all other matters not specifically addressed above, I find them without merit. I affirm the ALJ's Rulings excluding the issues proposed by NYPIRG as discussed above. Accordingly, the application is remanded to Staff to continue processing consistent with this interim decision.

For the New York State Department
of Environmental Conservation

/s/
By: Erin M. Crotty, Commissioner

Dated: Albany, New York
July 17, 2001

1 PSL Article X directs the presiding examiner to issue an order identifying the issues to be addressed at the PSL Article X hearing. Similarly, 6 NYCRR 624.4(b)(5) instructs the DEC associate examiner to rule on requests for full party status and to determine which issues satisfy the requirements for adjudication of issues as set forth in 6 NYCRR 624.4(c).